NOTICE OF CONFIDENTIALITY RIGHTS: IF YOU ARE A NATURAL PERSON, YOU MAY REMOVE OR STRIKE ANY OF THE FOLLOWING INFORMATION FROM ANY INSTRUMENT THAT TRANSFERS AN INTEREST IN REAL PROPERTY BEFORE IT IS FILED FOR RECORD IN THE PUBLIC RECORDS: YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVER'S LICENSE NUMBER.

XTO REV PROD 88 (7-69) PAID UP (04/17/07)B

OIL, GAS AND MINERAL LEASE

THIS AGREEMENT made this 17th day of March, 2008, between JAMES SCHEUERMANN, and wife, EDNA SCHEUERMANN, Lessor (whether one or more), whose address is: 2404 San Diego Dr. Arlington, Texas 76015, and XTO Energy Inc., whose address is: 810 Houston St., Fort Worth, Texas 761 02, Lessee, WITNESSETH:

1. Lessor, for valuable consideration, receipt of which is hereby acknowledged, and of the covenants and agreements of Lessee hereinafter contained, does hereby grant, lease and let unto Lessee the land covered hereby for the purposes and with the exclusive right of exploring, drilling, mining and operating for, producing and owning oil, gas. sulphur and all other minerals (whether or not similar to those mentioned), together with the nght to make surveys on said land, lay pipe lines, establish and utilize facilities for surface or subsurface disposal of salt water, construct roads and bndges, dig canals, build tanks, power stations, telephone lines, employee houses and other structures on said land, necessary or useful in Lessee's operations in exploring, drilling for, producing, treating, storing and transporting minerals produced from the land covered hereby or any other land adjacent thereto. The land covered hereby, herein called "saidland," is located in the County of Tarrant. State of Texas, and is descnbed as follows:

SEE EXHIBIT "A" ATTACHED HERETO AND MADE A PART HEREOF

This lease also covers and includes, in addition to that above described, ail land, if' any, contiguous or adjacent to or adjoining the land above described and (a) owned or claimed by Lessor by limitation, prescription, possession, reversion, after-acquired title or unrecorded instrument or (b) as to which Lessor has a preference right of acquisition. Lessor agrees to execute any supplemental instrument requested by Lessee for a more complete or accurate description of said land. For the purpose of determining the amount of any bonus or other payment hereunder, said land shall be deemed to contain .2112 acres, whether actually containing more or less, and the above recital of acreage in any tract shall be deemed to be the true acreage thereof. Lessor accepts the bonus as lump sum consideration for this lease and all rights amd options hereunder.

2. Unless sooner terminated or longer kept in force under other provisions hereof, this lease shall remain in force for a term of Three jZ) years from the date hereof, hereinafter called "primary term," and as long thereafter as operations, ais hereinafter defined, are conducted upon saidland with no cessation for more than ninety (90) consecutive days.

3. As royalty, Lessee covenants and agrees: (a) To deliver to the credit of Lessor, in the* pipe line to which Lessee may connect its wells, the equal 1/4 part of all oil produced and saved by Lessee from said land, or from time to time, at trie option of Lessee, to pay Lessor the average posted markefpnce of such 1/4 part of such oil at the welts as of the day it is run to the pipe line or storage ranks, Lessor's interest, in either case, to bear Oof the cost of treating ouTo render it marketable pipe line oil; (b) To pay Lessor on gas and casinqtiead gas produced from said land (1 ) when solcTby Lessee, 1/4 of the amount realized by Lessee, computed at the mouth of the wen, or (2) when used by Lessee off said land or in the manufacture of gasoline or other products, the market value, at the mouth of the well, of 1/4 of such gas and casitaghead gas; (c) To pay Lessor on all other minerals mined and marketed or utilized by Lessee from said land, 1/4 either in kind or value at the well or mine at Lessee's election except that on sulphur mined and marketed the royalty shall be one dollar ($1.00Tper long ton. If, at the expiration of trre primary term or at anytime or times thereafter there is any well on said land or on lands with which saicf land or any portion thereof has been pooled, capable of producing oil or gas, and all such wells are shut-in this lease shall, nevertheless, continue in force as though operations were '.being conducted on said land for so long as said wells are shut-in, and thereafter this lease may be continued in force as if no shut-in had occurred. Lessee covenants and agrees to use reasonable diligence to produce, utilize, or market the minerals capable of being produced from said wells, but in the exercise of such diligence, Lessee shall not be obligated to install or furnish facilities other than well facilities ana ordinary lease facilities of flow line's, separator, and lease tank, and shall not be required to settle labor trouble or to market gas upon terms unacceptable to Lessee. If, at any time or tim"»es after the expiration of the primary term, all such wells are shut-in for a period of ninety consecutive days, and during such time there are no operations on said land, then at or before the expiration of said ninety day period, Lessee shall pay or tender, by check or draft of Lessee, as royally, a s. urn equal to one dollar ($1 .00) for each acre of land then covered hereby. Lessee shall make like payments or tenders at or before the end of each anniversary of the expiration of said ninety day penod if upon such anniversary this lease is being continued in force solely by reason of the provisions c>f this paragraph. Each such payment or tender shall be made to the parties who at the time of payment would be entitled to receive the royalties wr.vch woukfbe paid under this lease if the wells were producing, and may be deposited in such bank as directed by Lessor, or its successors, whvch shall continue as the depositories, regardless of changes in the ownership of shut-in royalty. If at any time that Lessee pays or tenders shut-in royalty, two or more parties are, or claim to oe, entitled to receive same. Lessee may, in lieu ot any other method of payment herein provided, pay or tender such shut-in royalty, in the manner above specified, either jointly to such parties or separately to each in accordance with their respectiv « ownerships thereof, as Lessee may elect Any payment hereunder may be made by check or draft of Lessee deposited in the mail or delivered to the .warty entitled to receive payment or to a depository bank provided for above on or before the last date for payment. Nothing herein shall impair Lessee's right to release as provided in paragraph 5 hereof. In the event of assignment of this lease in whole or in part, liability for payment hereunder shall rest exclusively on the men owner or owners of this lease, severally as to acreage owned by each.

4. Lessee is hereby granted the right, at its option, to pool or unitize any land covered by this lease with am ' other land covered by this lease, and/or with any other land, lease, or leases, as to any or all minerals or horizons, so as to establish units containin g not more than 80 surface acres, plus 1 0% acreage tolerance; provided, however, units may be established as to any one or more horizons, or existing units may be enlarged as to any one or more horizons, so as to contain not more than 640 surface acres plus 1 0% acreage tolerance, if limited to one or more of the following: (1 ) gas, other than casinghead gas, (2) liquid hydrocarbons (condensate) which are not liquids in the subsurface reservoir, (3') iininerals produced from wells classified as gas wells by the conservation agency having jurisdiction. If larger units than any of those herein .permitted, either at the time established, or after enlargement, are permitted or required under any govemmentaT rule or order, for the drilling or operate m of a well at a regular location, or for obtaining maximum allowable from any well to be drilled, drilling, or already drilled, any such unit maybe established or enlarged to conform to the size permitted or required by such governmental order or rule. Lessee shall exercise said option as to each desired unit by executing an instrument identifying such unit and filing it for record in the public office in which this lease is recorded. Such unit shall be ^come effective as of the date provided for in said instrument or instruments but if said instrument or instruments make no such provision, then such li nit shall become effective on the date such instalment or instruments are so filed of record. Each of said options may be exercised by Lessee at anv y time and from time to time while this lease is in force, and whether before or after operations or production has been established either on said land, i or on the portion of said land included in the unit or on other land unitized therewith. A unit established hereunder shall be valid and effective for all \ purposes of this lease even though there may be mineral, royalty or leasehold interests in lands within the unit which are not effectively pooled or unitized. Any operations conducted on anypart of such unitized land shall be considered, for all purposes, except the payment of royalty, operation;? conducted upon said land under this lease. There shall be allocated to the land covered by this lease within each such unit (or to each separate tractt within the unit if this lease covers separate tracts within the unit) that proportion of the total production of unitized minerals from the unif, after deducting any used in lease or unit operations which the number of surface acres in such land (or in each such separate tract) covered by this lease withi. n the unit bears to the total number of surface acres in the unit, and the production so allocated shall be considered for all purposes, including paynient or delivery of royalty, overriding royalty and any other payments out of production, to be the entire production of unitized minerals from the lano' to which allocated in the same manner as though produced therefrom under the terms of this lease. The owner of the reversionary estate of any temr i royalty or mineral estate agrees that the accrual of royalties pursuant to this paragraph or of shut-in royalties from a well on the unit shall satisfy any lii mitation of term requiring production of oil or gas. The formation of any unit hereunder which includes [and not covered by this lease shall not have tht ? effect of exchanging or transferring any interest under this lease (including, without limitation, any shut-in royalty which may become payable under thii s lease) between parties owning interests in land covered by this lease ancTparties owning interests in land not covered by this lease. Neither shall it imps Tir the right of Lessee to release as provided in paragraph 5 hereof, except that Lessee may not so release as to lands within a unit while there are operations thereon for unitized minerals unless all pooled leases are released as to lands within the unit At any time while this lease is in force Lesset ? may dissolve any unit established hereunder by filing for record in the public office where this lease is recorded a declaration to that effect, if at that tii ne there is no unitized minerals being produced from such unit Any unit formed may be amended, re-formed, reduced or enlarged by Lessee at it s election at any time and from time to time after the original forming thereof by filing an appropriate instrument, of record in the public office in which i the pooled acreage is located. Subject to the provisions of this paragraph 4, a unit once established hereunder shall remain in force so long as any lease subject thereto shall remain in force. If this lease now or hereafter covers separate tracts, no pooling or unitization of royalty interests a: s between any such separate tracts is intended or shall be implied or result merely from the inclusion of such separate tracts within this lea se but Lessee shall nevertheless have the right to pool or unitize as provided in this paragraph 4 with consequent allocation of production as herein provided. As used in this paragraph 4, the words "separate tract" mean any tract with royalty ownership differing, now or hereafter, either as to parti es or amounts, from that as to any other part of tiie leased premises.

MEMORANDUM OF OIL. GAS AND MINERAL LEASE

STATE OF TEXAS §

§ KNOW ALL MEN BY THESE PRESENTS: COUNTY OF TARRANT §

Under date of March 17, 2008, James Scheuermann and Edna Scheuermann, (hereinafter called "Lessor"), did execute and deliver to XTO Energy Inc., (hereinafter referred to as Lessee"), an Oil, Gas and Mineral Lease (the "Lease") in which Lessor granted, leased and let unto Lessee the lands located in Tarrant County, Texas, described below:

BEING LOT 7 IN BLOCK 7 OF MONTERREY NO. 3, AN ADDITION TO THE CITY OF ARLINGTON, TARRANT COUNTY, TEXAS, ACCORDING TO THE PLAT THEREOF RECORDED IN VOLUME 38&-70, PAGE 27, PLAT RECORDS, TARRANT COUNTY, TEXAS.

The Lease grants Lessee the exclusive right to explore for, drill for, produce and market oil, gas and other hydrocarbons for a term of three (3) years, with the option to renew said Lease for two (2) additional years, and so long thereafter as oil, gas and other hydrocarbons are produced in commercial quantities from the lands in accordance with the terms of the Lease.

This Memorandum of Oil and Gas Lease is executed by Lessor and Lessee and placed of record in the county in which the lands are located for the purpose of placing all persons on notice of the existence of the Lease, which Lease is not, at the request of both parties, being placed of record.

the

WITNESS WHEI _ day of P~"t

iOF, this Memorandum of Oil, Gas and Mineral Lease is executed on this , 2008.

LESSORS:

Signature: a^x-i^L, ST)(>Aa £m£4*iaasiaasV^ lMES SCHEUERMANN

Signature: ^g^^c^^^^^i^^

EDNA SCHEUERMANN

STATE OF COUNTY OF

TEXAS

TARRANT

ACKNOWLEDGMENT

This instrument was acknowledged before me on the SCHEUERMANN.

€k PATRICK R. PADBERG % MVCOMMISSlOMEXfWES & September 3,3011 r

day of

by JAMES SCHEUERMANN and EDNA

Notary Signature Printed Name Notary Public, State of

My commission expires:

Seal:

EXHIBIT "A1

Attached hereto and made a part hereof that certain Oil, Gas and Mineral Lease dated March 1 7, 2008, by and between JAMES SCHEUERMANN, and wife, EDNA SCHEUERMANN and XTO Energy Inc.

The provisions of this Exhibit "A" suspend and control with respect to all inconsistent provisions in the oil and gas mineral lease attached hereto. Hereto all terms, clauses, amendments shall be considered "conditions" and not "covenants". Lessee shall also pay to the Lessor it's proportionate share of any street, alleyway, highway, railroad, canal, river, or body of water adjacent to or contained within the subdivision, or, if the property is not included in a subdivision, any such acreage immediately adjacent to Lessor's property on the bonuses and all royalties.

LEGAL DESCRIPTION

BEING LOT 7 IN BLOCK 7 OF MONTERREY NO. 3, AN ADDITION TO THE CITY OF ARLINGTON, TARRANT COUNTY, TEXAS, ACCORDING TO THE PLAT THEREOF RECORDED IN VOLUME 388-70, PAGE 27, PLAT RECORDS, TARRANT COUNTY, TEXAS.

This lease shall include all streets, alleyways, easements, gores and strips of land adjacent and contiguous thereto. If any additional acreage is included in this Lease pursuant to the foregoing sentence, then bonus and royalty shall be calculated and paid as to said additional acreage on the same terms as it is calculated and paid for the land specifically described above.

OPTION TO EXTEND

Lessee is hereby given the option to be exercised at any time prior to the date on which this lease would expire in accordance with the terms and provisions, of extending this Lease for an additional period of (2) years as to all or any portion of the acreage of the Leased Premises. The only action required by Lessee to exercise such option shall be the payment to Lessor an additional consideration of the sum of $22,000 per mineral acre, payable by check or electronic deposit only. Should this option be exercised as herein provided, it shall be considered for all purposes as though this lease originally provided for a primary term of (5) years. If this Lease is extended as to only a portion of the acreage then covered thereby, Lessee shall designate such portion by a recordable instrument.

MINERALS COVERED

This Lease covers only oil and gas. The term "oil and gas" means oil, gas and other liquid and gaseous hydrocarbons produced through a well bore.

ROYALTY

(a} As royalties, Lessee agrees:

(1) To deliver free of cost to Lessor at the wellfs) or to the credit of Lessor at the pipeline to which the well(s) may be connected, 25% (the "Royalty Percentage") of all oil and other liquid hydrocarbons produced and saved from the Land. At Lessor's option, which may be exercised from time to time and, which initially shall be assumed as exercised by Lessor unless Lessor notifies Lessee in writing otherwise, Lessee shall pay to Lessor the same part of the market value at the well of oil and other liquid hydrocarbons of like grade and gravity prevailing on the day the oil and other hydrocarbons are sold from the Lease In the general area in which the Land is located.

(2) To pay to Lessor:

(i) On gas produced from the Land and sold by Lessee or used on or off the Land and to which the following subparagraphs (ii) and (iii) do not apply, the Royalty Percentage of the market value at the point of sale, use, or other disposition, subject to the other provisions herein.

(ii) On gas produced from the Land that is processed in a processing plant in which Lessee or an affiliate of Lessee has a direct or indirect interest, the higher of the Royalty Percentage of the market value of the gas at the inlet to the processing plant, or the Royalty Percentage of the market value of all processed liquids saved from the gas at the plant plus the Royalty Percentage of the market value of all residue gas at the outlet of the point of sale, use, or other disposition.

(iii) On gas produced from the Land that is processed in facilities other than a processing plant in which Lessee or an affiliate of Lessee has a direct or indirect interest, the Royalty Percentage of the market value at the plant of all processed liquids credited to the account of Lessee and attributable to the gas plus the Royalty Percentage of the market value of all residue gas at the point of sale, use, or other disposition.

(b) The market value of gas will be determined at the specified location by reference to the gross heating value (measured in British thermal units) and quality of the gas. The market value used in the calculation of oil and gas royalty will never be less than the total proceeds received by Lessee in connection with the sale, use, or other disposition the oil or gas produced or sold. For purposes of this paragraph, if Lessee receives from a purchaser of oil or gas any reimbursement for all or any part of severance or production taxes, or if Lessee realizes proceeds of production after deduction for any expense of production, gathering, dehydration, separation, compression, transportation, treatment, processing, storage, or marketing, then the reimbursement or the deductions will be added to the total proceeds received by Lessee, except as set forth in (d) below.

(c) Except as permitted in (d) below, Lessor's royalty wilt never bear, either directly or indirectly, any part of the costs or expenses of production, separation, gathering, dehydration, compression, transportation, trucking, processing, treatment, storage, or marketing of the oil or gas produced from the Land or any part of the costs of construction, operation, or depreciation of any plant or other facilities or equipment used in the handling of oil or gas. Lessor's royalty will bear its share of all severance taxes.

(d) If Lessee, or an affiliate of Lessee, compresses, transports, processes, or treats gas produced from the Land, Lessor's royalty shall not bear any of the costs associated therewith. If a third party, that is not an affiliate of Lessee, compresses, transports, processes or treats gas produced from the Land, Lessor's royalty will bear its proportionate share of costs and expenses associated therewith, which such expenses shall never exceed $0.30 per Mcf.

(e) Lessor shall be paid the Royalty Percentage of all payments and other benefits made under any oil or gas sales contract or other arrangement, including take-or-pay payments and payments received in settlement of disputes; provided that if Lessor receives a take-or-pay payment or similar payment for gas that has not been produced. Lessor will only receive its Royalty Percentage of any payments made by the gas purchaser for such make-up gas taken pursuant to the take-or-pay provision or similar provision.

(f) If gas produced from the La nd is sold by Lessee pursuant to an arms-length contract with a purchaser that is not an affiliate of Lessee, and for a term no longer than that which is usual and customary in the industry at the time the contract is made, then the market value of the gas sold pursuant to the contract shall be the total proceeds received by Lessee in the sale, subject to the provisions of paragraphs 4(b) and (d) above.

(g) As used in this Lease, "affiliate" means (i) a corporation, joint venture, partnership, or other entity that owns more than ten percent of the outstanding voting interest of Lessee or in which Lessee owns more than ten percent of the outstanding voting interest; or (ii) a corporation, joint venture, partnership, or other entity in which, together with Lessee, more than ten percent of the outstanding voting interests .of both Lessee and the other corporation, joint venture, partnership, or other entity is owned or controlled by the same persons or group of persons.

(h) Unless there is a reasonable title dispute or question as to title, Lessee must disburse or cause to be disbursed to Lessor its royalty on production from a particular well not later than one hundred twenty (120) days after thie end of the month of first sales of production. Thereafter, Lessee must disburse or cause to be disbursed to Lessor its royalty on production by the last day of the second month after the month in which production is sold. If not paid when due, Lessor's royalty will bear interest at the rate equal to the average prime interest rate charged by the two largest banks in Tarrant County, Texas, plus two percent (2%), from due dsite until paid, which amount Lessee agrees to pay. However, in the event it becomes necessary for Lessor to file a law suit to obtain past due.' royalties, and Lessor is successful, Lessor's royalty will bear interest at the maximum lawful rate from the due date until paid.

(i) Acceptance by Lessor of royalties that are past due will not act as a waiver or estoppel of its right to receive interest due thereon unless Lessor expressly so provides in writing signed by Lessor. The royalty payment obligations under this Lease shall not be affected by any division order or the provisions of Section 91 .402 of the Texas Natural Resources Code or any similar statute.

(j) The receipt by Lessee from a purchaser or a pipeline company of proceeds of production for distribution to Lessor will not result in Lessee acquiring legal or equitable title to Lessor's share of those proceeds, but Lessee will' at all time hold Lessor's share of those proceeds for the benefit of Lessor. Notwithstanding the insolvency, bankruptcy, or other business fa ilure of a purchaser of production from the Land or pipeline company transporting production from the Land, Lessee will remain liable for payment to Lessor for, and agrees to pay Lessor all royalties due Lessor together with Interest if not timely paid. Lessor shall never be paid in kind. Furthermore, all payments due to Lessor under this Lease shall be made by check or electronic deposit.

SHUT-IN ROYALTY

Lessee shall pay an annual shut-in royalty of $5,000 per each well in pooled unit from which gas is not .being sold. Payments shall be made within 60 days after the well is shut-in and shall be proportionately reduced to Lessor's percentage of acreage in the pooled unit While shut in royalty payments are timely and properly paid, this Lease will be held as a producing lease. The right kof the Lessee to maintain this Lease in force by payment of shut in gas royalty is limited to a period of (3) cumulative years during which the well is actually shut in.

ACREAGE LIMITATION/POOLING

A pooled unit for a horizontal well may not exceed 640 acres plus a maximum acreage tolerance of 1 0%. LV-">on the expiration of the primary term of this Lease, of any extension, or after cessation of operations as provided herein, the Lease shall terminate as to all rights (100*) below either (1) the deepest depth drilled in any well drilled on the leased premises or on lands pooled therewith or (2/ the stratigraphic equivalent of the base of the Bamett Shale formation producing or capable of producing in any well drilled on the leased .premises or on lands pooled therewith, whichever is the deepest; provided, however, if Lessee is then engaged in operations on the leased Remises or on lands pooled therewith, this Lease shall remain in full force and effect as to all depths so long as no more than ninety (90,^ days elapse between the completion of one well and the commencement of operations of another well.

WATER

Lessee shall have no use of water from the Leased Premises. Lessee will conduct all operations hereunder in compliance with the rules of the Railroad Commission of Texas, federal and state environmental laws and regulations and municipal ordinances.

NO WARRANTIES

Lessor makes no warranty of any kind with respect to the title to the land or mineral estate in the leased premises. By acceptance of this Lease, Lessee acknowledges that it has been given full opportunity to investigate and has conducted sufficient investigation to satisfy itself as to the title to the leased premises. Lessee assumes all risk of title failures.

SUBORDINATION AGREEMENT FEES/ DIVISION ORDERS

Notwithstanding anything contained herein to the contrary, neither Lessee nor Lessee's assigns shall ever require a subo rdination, partial release of lien, release of lien, consent or other documentation from any lender of Lessor that has a iien on said land as a con edition to Lessor receiving any subsequent royalty payment, unless the wellbore penetrates the leased premises or is located within 330 feet fi *om the leased premises, in which case Lessee shall notify Lessor. However, Lessor will cooperate with any reasonable effort of Lessee, at . Lessee's sole expense, to obtain same from Lessor's lender on behalf of Lessor. In the event Lessee is unable to obtain a subordination agr 'eement from any lien holder of a lien affecting the leased premises, Lessee is hereby permitted to discharge any tax, mortgage, or other lien or interest and other charges on the leased premises, and in the event Lessee does so, Lessee will have the option of applying the royalties accruing to Lessor toward payment of same and Lessee shall be subrogated to the rights of the holder thereof. In the event Lessee must t exercise its discharging rights herein granted, Lessee shall provide prior written notice to Lessor.

INDEMNITY

Lessee agrees to indemnify and hold harmless Lessor, and Lessor's representatives, successors, and assigns against all expenses, claims, demands, liabilities, and causes of action of any nature for injury to or death, of persons and loss or damage to property, including, without limitation, reasonable attorney's fee, expert fees, and court costs, caused by lessee's operations on said land or any violation of any environmental requirements by Lessee. "Lessee" includes Lessee, its agents, employees, servants, contractors, and any other person acting under its direction and control, and its independent contractors. The Lessee shall fully protect, indemnify, and hold harmless the Le>ssor. Lessee's indemnity obligations survive the termination of this lease.

ASSIGNMENTS

Any assignment by Lessee shall be subject to all the conditions of this Lease. Every transferee shall be subject to all conditions and obligations included in this Lease including any unpaid royalties. Lessee shall provide Lessor with copies of any assignments of this Lease.

CONTINUOUS DEVELOPMENT

If, at the expiration of the Primary Term, oil or gas is not being produced from the Leased Premises, but Lessee has commenced the drilling of a well on the Leased Premises, the lease will not terminate, but will remain in effect for so long thereafter as operations are carried out with the due diligence with no cessation of more than 60 consecutive days, and if the operations result in the production of oil or gas, the Lease shall remain in force as otherwise provided herein. For the purpose of this Lease, the term "operation" shall mean operation of any of the following: preparing a drill site, drilling, testing, completing, reworking, re-completing, deepening, plugging back, or repairing of a well in search for or in the endeavor to obtain production of oil and gas. For the purpose of Paragraphs 4 and 1 1 , only, of this Lease, the term "operations" shall mean "production of oil and gas and other minerals" as provided in this Lease. i

NO SURFACE USE

Notwithstanding anything contained herein to the contrary, Lessee hereby waives and releases all surface rights of every kind and nature acquired under this lease. Lessee shall not conduct any surface operations whatsoever upon the Leased Premises. However, this waiver of surface rights shall not be construed as a waiver of the right of Lessee to exploit, explore for, develop, or produce such oil or gas with wells drilled from outside of the leased premises and in no event may the drilling activity penetrate the land at a depth of less than 500 feet below the surface.

ATTORNEY'S FEES

In the event that either party is required to employ legal counsel for the enforcement of any provision of this lease or defense of any alleged breach, the prevailing party will be entitled to recover from the other party reasonable attorney's fees and expenses incurred by the prevailing . party.

At all times while this lease is in force, lessee shall acquire and maintain insurance covering all of its activities and operations hereunder, including any work performed on its behalf by contractors, subcontractors, and others. The policies shall include coverage for comprehensive general liability, for bodily injury and property damage, blowout and loss of well coverage and coverage for any damage to the environment including coverage for the cost of clean up and surface remediation. The coverage shall be in the minim urn amount of $5,000,000.

MISCELLANEOUS

Lessee, at all times, will comply with all municipal, state and federal statutes as they apply to the operation, preparation of a drill site, drilling, testing, completing, reworking, re-completing, deepening, plugging back, or repairing of a well in search for or in the endeavor to obtain production of oil and gas. This Lease is entered into in the State of Texas and shall be construed, interpreted and enforced in accordance with the laws of the State of Texas without reference to choice-of-law rules. Should any of the provisions hereirn be determined to be invalid by a court of competent jurisdiction, it is agreed that this shall not affect the enforceability of any other provision therein and that the parties shall attempt in good faith to renegotiate that provision so determined to be invalid to effectuate the purpose of and to conform to the law regarding such provision. Venue for any dispute arising under this Lease shall lie in Tarrant County, Texas, where all obligations under this Lease are performable. At any time that any obligation of the Lessee to make a payment shall not be complied with in accordance with the terms of the Lease, it is agreed and understood that Lessee will pay to Lessor interest thereon at the highest lawful rate allcwed to be charged to Lessee by Lessor under the then existing Statutes of the State of Texas. It is agreed and understood that time is of the -essence in the performing of each responsibility under the terms of this Lease. The rights of Lessor under this Lease shall be in addition to., and not in lieu of, all rights Lessor may have as to payment of royalty under Texas law, including, without limitation, V.T.C.A. Natural Resources Code §§ 91.401 through 91 .405.

INSURANCE

EDNA SCHEUERMANN

5. Lessee may at any time and from time to time execute and deliver to Lessor or file for record a release or releases of this lease as to any part or all of said land or of any mineral or horizon thereunder, and thereby be relieved of all obligations, as to the released acreage or interest.

6. Whenever used in this lease the word "operations" shall mean operations for and/or any of the following: preparing the drillsite location or access road, drilling, testing, completing, reworking, recomputing, deepening, sidetracking, plugging back or repairing of a well in search for or in an endeavor to obtain production of oil, gas, sulphur or other minerals, excavating a mine, production of oil, gas, sulphur or other mineral, wnetner or not in paying quantities.

7. Lessee shall have the use. free from royalty, of water, other than from Lessor's water wells, and of oil and gas produced from said land in all operations hereunder. Lessee shall have the right at any time to remove all machinery and fixtures placed on said land, including the nght to draw and remove casing. No well shall be drilled nearerlhan 500 feet to the house or bam now on said land without the consent of the Lessor. Lessee shall pay for damages caused by its operations to growing crops and timber on said land.

8. The rights and estate of any party hereto may be assigned from time to time in whole or in part and as to any mineral or horizon. All of the covenants, obligations, and considerations of this lease shall extend to and be binding upon the parties hereto, their heirs, successors, assigns, and successive assigns. No change or division in the ownership of said land, royalties, or other moneys, or any part thereof, howsoever effected, shall increase the obligations or diminish the rights of Lessee, including, but not limited to, the location and drilling of wells and the measurement ot production. Notwithstanding any other actual or constructive knowledge or notice thereof of or to Lessee, its successors or assigns, no change or division in the ownership ofsaicf land or of the royalties, or other moneys, or the right to receive the same, howsoever effected, shall be binding upon the then record owner of this lease until sixty (60) days after there has been furnished to such record owner at his or its principal place of business by Lessor or Lessor's heirs, successors or assigns, notice of such change or division, supported by either originals or duly certified copies of the instruments which have been properly filed for record and which evidence such change or division, and of such court records and proceedings, transcripts, or other documents as shall be necessary in the opinion of such record owner to establish the validity of such change or division. If any such change in ownership occurs by reason of the death of the owner, Lessee may, nevertheless pay or tender such royalties, or other moneys, or part thereof, to the credit of the decedent in a depository bank provided for above.

9. In the event Lessor considers that Lessee has not complied with all its obligations hereunder, both express and implied Lessor shall notify Lessee in writing, setting out specifically in what respects Lessee has breached this contract. Lessee shall then have sixty (60) days after receipt of said notice within which to meet or commence to meet all or any part of the breaches alleged by Lessor. The service of said notice shall beprecedem to the bringing of any action by Lessor on said lease for any cause, and no such action shall be brought until the lapse of sixty (60) days after service of such notice on Lessee. Neither the service of said notice nor the doing of any acts by Lessee aimed to meet all or any of the alleged breaches sha be deemed an admission or presumption that Lessee has failed to perform all its obligations hereunder If this lease is canceled for any cause, it shall nevertheless remain in force and effect as to (1) sufficient acreage around each well as to which there are operations to constitute a drilling or maximum allowable unit under applicable governmental regulations, (but in no event less that forty acres), such acreage to be designated by Lessee as nearly as practicable in the form of a square centered at the well, or in such shape as then existing spacing rules require; and (2) any part of said land included in a pooled unit on which there are operations. Lessee shall also have such easements on said land as are necessary to operations on the acreage so retained and shall not be required to move or remove any existing surface facilities necessary or convenient for current operations.

1 0. Lessor hereby warrants and agrees to defend title to said land against the claims of all' persons whomsoever. Lessor's rights and interests hereunder shall be charged primarily with any mortgages, taxes or other liens, or interest and other charge on said land, but Lessor agrees that Lessee shall have the rignt at any time to pay or reduce same for Lessor, either before or after maturity, and be subrogated to the rights of the holder thereof and to deduct amounts so paid from royalties or other payments payable or which may become payable to Lessor and/or assigns under this lease. If this lease covers a less interest in the oil, gas, sulphur, or other minerals in all or any part of said land than the entire and undivided fee simple estate (whether Lessor's interest is herein specified or not), or no interest therein, then the royalties and other moneys accruing from any part as to which this lease covers less than such full interest, shall be paid only in the proportion which the intei-est therein, if any, covered by this lease, bears to the whole and undivided fee simple estate therein. All royalty interest covered by this lease (whether or not owned by Lessor) shall be paid out ot the royalty herein provided. This lease shall be binding upon each party who executes it without regard to whether it is executed by air those named herein as Lessor.

1 1 . if, while this lease is in force, at, or after the expiration of the primary term hereof, it is not being cont jnued in force by reason of the shut-in well provisions of paragraph 3 hereof, and Lessee is not conducting operations on said land by reason of (1) an y law. order, rule or regulation, (whether or not subsequently determined to be invalid) or (2) any other cause, whether similar or dissimilar, (except fi nancial) beyond the reasonable contra ot Lessee, the primary term hereof shall be extended until the first anniversary date hereof occurring ninety ( '90) or more days following the removal or such delaying cause, and this lease may be extended thereafter by operations as if such delay had not o ccurred.

1 2. Lessor agrees that this lease covers and includes any and all of Lessor's rights in and to any existii ng well(s) and/or wellbore(s) on said land, other than existing water wells, and for all purposes of this lease the re-entry and use by Lessee of any existing well and/or wellbore shall be deemed the same as the drilling of a new well.

13. Notwithstanding anything to the contrary contained in this lease, at the option of Lessee, wh rich may be exercised by Lessee giving notice to Lessor, a weft which has been drilled and Lessee intends to frac shall be deemed a w ell capable of producing in paying quantities and the date such well is shut-in shall be when the drilling operations are completed.

14. As a result of land development in the vicinity of said land, governmental rules or ordinance is regarding well sites, and/or surface restrictions as may be set forth in this lease and/or other leases in the vicinity, surface locations for well sites in the vicinity may be limited and Lessee may encounter difficulty securing surface locationfs) for drilling, reworking or other operations. Therefore, since drilling, reworking or other operations are either restricted or not allowed on said land or other leases in the vicinity, it is agree d that any such operations conducted at a surface location off of said land or off of lands with which said land are pooled in accordance with this 5 lease, provided that such operations are associated with a directional well for the purpose of drilling, reworking, producing or other operati ons under said land or lands pooled therewith, shall for purposes of this lease be deemed operations conducted on said land. Nothing confc ained in this paragraph is intended to modify any surface restrictions or pooling provisions or restrictions contained in this lease, except as ex pressly stated.

IN WITNESS WHEREOF, this instrument is executed on the date first above written. LESSOR(S)

•4AMES SCHEUERMANN

EDNA SCHEUERMANN

ACKNOWLEDGMENT

STATE OF TEXAS )

) ss.

COUNTY OF TARRANT )

This instrument was acknowledged before me on the day of 1 1ATT \ 2008 tW"JAMES\S SCHEUERMANN and EDNA

SCHEUERMANN.

Signatun

My commission exp| Seal:

PATRICK RPADBEHQ J > Notary Fbblk